For EDMC boss, it's getting back to basics

November 16, 2013 7:41 PM

Larry Roberts/Post-Gazette

Ed West, CEO of EDMC, poses on Friday at the Art Institue of Pittsburgh.

By Ann Belser / Pittsburgh Post-Gazette

On Thursday afternoon, the public relations staff of Education Management Corp. planned to have photos taken of the company's CEO Ed West alongside student artwork in the gallery of the Art Institute of Pittsburgh.

But the CEO was trumped by a professor -- and he didn't mind at all.

The gallery was being used by Mary Lou Westman, an English professor at the school, who was giving a lecture to a roomful of students on "the benefits of mindfulness."

The lunch and learn lectures, which give faculty members a chance to explore topics outside of their usual subject matter, are one of the ways that the school is engaging its students.

Increasing engagement is one Mr. West's priorities for the company, which is educating an average of 117,720 students at its 123 campuses across the country.

EDMC, the parent company of the Art Institute of Pittsburgh along with 51 other Art Institutes across the country, also runs Argosy University with 28 locations, South University with 15 campuses, and 28 Brown Mackie College campuses.

The student bodies of the schools lean toward the non-traditional. EDMC schools attract lower middle class to poor students, mostly women, who are determined to use the degrees they earn in health care, business, education and even at the company's law school to pull themselves up into economic security.

But the company, which has a 43 percent ownership stake by Goldman Sachs and the investment company's affiliates, faces a tremendous number of challenges as lawyers seems to be coming at them from all sides. The U.S. Justice Department and state attorneys general from Colorado, Florida, Kentucky, New York and Massachusetts all have active investigations of EDMC.

Even the federal Department of Education is working on changing the regulations regarding for-profit colleges with an eye on determining the amount of federal grant money and loans students can receive based on the employment levels and salaries of an institution's graduates.

There is also a federal lawsuit facing EDMC over its recruiting practices. That lawsuit holds the threat of a possible payback of $11 billion in federal money.

An investigation by the Securities Exchange Commission is looking into the legality of a goodwill impairment charge against the company's profits recorded in May that took $294 million out of the company's bottom line. The charge was recorded based on lower revenues from a smaller student body. The company has 30,000 fewer students than it did at its peak just three years ago.

Aside from the legal challenges, Mr. West said what he saw were schools that were not engaging the students as well as they should.

Since he took over as CEO, he has traveled around the country and met with 7,800 students, faculty and staff members to talk about what works and what doesn't.

"It's fantastic," he said about meetings. "This is where reality is, it's on the campus."

He said his travels around the country have focused on the priorities he is setting for the company: "Let's get back to basics -- student experience, engagement and achievement."

One of the changes he has encouraged, for instance, is to open the more popular courses taught by the best professors to new students, so they can come into a program and immediately get a taste of the excitement in their field.

Another change, which is now throughout the Brown Mackie College campuses, is that instead of text books, the students are issued iPads pre-loaded with the course materials. The change came about after professors complained that the students were trying to save money by not buying text books, which often cost more than a $100 a book. Instead, the college charges a materials fee that is lower than the cost of the text books. Now at Brown Mackie campuses, instead of the heavy backpack full of text books, all of a student's course materials can be carried in a string bag.

Professors have taken the iPad platform even farther in some courses by creating course materials and slides to accompany lectures.

EDMC also eliminated some of its online programs and individual courses that it offered through South University to focus on those with the best results.

In addition to the traveling from campus to campus, Mr. West is also engaging in his own version of "secret shopping" by logging into online courses -- they are the only classes where, as a middle-aged guy in a suit, he won't stand out from the rest of the class.

An aspect of all of the changes, Mr. West said, is trying to reduce costs so that students can afford to continue their educations. Full-time tuition at the Art Institutes has been frozen through 2015.

This fall Argosy University, at its Orange, Calif, campus, started a new competency-based MBA that will give credit for certain skills gained during a student's career, much the same way an undergraduate can get out of a language requirement by passing the test.

Mr. West, who has a bachelor's degree from Emory University in Atlanta, said he has always wanted an MBA.

It's hard to say credit Mr. West's skills would earn him: He is a CEO of the company with revenues of $580.4 million in the most recent quarter, but the company also experienced a net loss of $9.5 million. Perhaps the fact that the loss was lower than the $13.1 million in the same quarter of last year can get him extra credit.

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